Customer Success: Not a New Year’s Resolution, But a Way of Life – Part 2

In the first part of this post, I discussed the need to create a pervasive culture of Customer Success across an organization, and why the current approach to Customer Success is reactive, and ultimately, doomed to failure. Now, let’s examine how you can go about making it a way of life, how you should measure progress towards this goal.

Measuring if Customer Success is Becoming a Way of Life Within the Company

It starts at the top. All the KPIs that you are measuring for the CEO and the board, like churn, NPS, net renewals, retention, etc. need to be baked into the compensation for the executives. Compensation drives behavior.

In one of my conversations with a CEO about making Customer Success as a way of life, he mentioned that his company values customers as the top priority. In order to make this value known to the entire organization, he asked the HR team for a review of everyone in the company, with a section that questions “How have you contributed to Customer Success?”.

Everybody pushed back as an initial response to this. The software programmers said they don’t do anything around Customer Success. To which the CEO responded that the quality and intuitiveness of the UI has everything to do with Customer Success. Just as the Executive Assistant, who helps in setting up customer visits; the professionalism of how she represents the company is also related to Customer Success. From the Marketing sphere, the process of nurturing messages must match with the message after acquiring new logos. Every piece of the company has a place in Customer Success and it all starts with the CEO.

In a past company at which I was VP of Customer Success, we invited a customer to our company’s all hands meeting, wherein, the customer presented a view of how they are using the platform by giving an actual demo. This gave the entire company a practical view of how the customer was using the product, and allowed the customer to provide the company employees some direct perspective about their experience being a customer. The engineers loved this approach, as they never or rarely saw how their product actually got used.

In the pre-SaaS world, renewals weren’t as a big of a focal point. Everyone worked in a perpetual environment, in which they followed the waterfall methodology of delivering products People tended to work in a more silosed environment. Accountability sometimes became elusive, as they would end up saying, it’s a Support issue or Professional Services can fix it. But in the SaaS world, it’s all of our problem. When we lose a customer, we cannot simply say that it’s the CS teams fault. If you have a easy-to-consume product like Facebook, where you don’t have to install, deploy, or read a user manual, it works flawlessly most of the time. That’s just like nirvana. That isn’t the case in the high-tech world, especially the B2B environment.

There are no easy answers for what is the correct renewal rate or churn rate. When a company does its normal business without Customer Success, they have a terminal rate of churn. Without the Customer Success function, you build a product, sell it, and engage with customers. There is a natural level of churn, along with a certain percentage of renewals. My experience has been that companies usually start out with a retention rate somewhere between 70-85%. The question is, what are you trying to get to and why? Is 100% renewal achievable?

Churn is a natural process in which people go away, companies get acquired, or competition changes. Churn analysis allows us all to understand the systemic root causes. Using CSAT surveys, NPS, and a real-time health framework, you can really start to understand the customer journey. Focusing on these leading metrics, you can get to a point where you can understand the systemic root causes to fix the problem. Sometimes churn is healthy. Sales, by definition, doesn’t always result in the right customer.

The CEOs Role in Making CS A Way of Life

Customer Success starts with the CEO. It’s the CEO who gives direction, emphasizes priorities, and designs the compensation packages for the various parts of the company that build and get the product into the marketplace for customers.

Eric Yuan, the CEO of Zoom Video Communications, doesn’t talk about how great his video compression technology is, but he talks about how important his customers are and his commitment to their success. Eric’s product is a phenomenal market fit. He has an exceptional and competitive product at a great price. It is really the passion from the CEO that facilitates making Customer Success a way of life.

Ultimately, it comes to the value delivered – both the time to value and the perception of value. The health framework pinpoints the key elements that we have to monitor as the customer goes through their journey with us. This ultimately shapes up as an early warning system that flags potential problems. An early warning system not only helps in identifying traits of success and failure, but also helps in measuring whether Customer Success has become a way of life and not just remained a forgotten new year’s resolution.

Mark Pecoraro is a senior business executive and trusted advisor to leadership teams with a demonstrated ability in consistently delivering high customer satisfaction, client retention and operational excellence in a recurring revenue business model for both start-up and established businesses. He was previously VP of Customer Success for Conviva and is a recognized thought-leader in Customer Success. He has held a variety of executive roles in enterprise SaaS organizations including Appcelerator, SOASTA, WhiteHat Security and Accept Software. He also serves on the Board of Advisors for Strikedeck and BlueNose Analytics, and is a member of the Standards committee for The Customer Success Association.